A Label's Underground Niche


By Jeffrey Gangemi Andrew Rallo was standing on a New York City subway platform in his nicest suit, waiting for the B train to take him uptown for an interview at a marketing outfit when he heard music in the distance. The guitarist across the platform wasn't much to look at, but his talent was obvious. "People just started coagulating around this guy," Rallo recalls. "They were talking to each other and smiling and giving him money. They were doing things that New Yorkers don't normally do." And so the idea for Subway Records was born.

For the next two years, Rallo worked as a technical sales engineer for an online advertising company while saving money and scouring the subway for musical talent. He finally launched his fledgling record label and Web site in the fall of 2002. His vision is to create a comprehensive search engine -- a "Google for subway musicians" -- to get their music heard and market its energy to the public.

COLD CALLING FOR GIGS. How does a 26-year-old launch a record company with no experience, no marketing, and no capital behind him? Well, for starters, Rallo has always believed in his mission to bring that unique subterranean energy above ground -- he's committed to helping those who have a surplus of talent but no voice. And he knew he had to take advantage of the most accessible and inexpensive media outlet out there -- the Internet -- while tapping a product that markets itself constantly to the 3 million to 6 million people who ride the New York City subway every day.

Many artists on Rallo's label, like Lorenzo LaRoc, an electric violinist who has played the subway for years, already have their own promotional Web sites. They just need someone to work on their behalf. With Subway Records' backing, LaRoc was able to trade the screech of passing trains for the screams of Madison Square Garden fans. "Playing the halftime show for the Knicks game was a dream come true," he says. "And I got paid $500 for two minutes of work."

To book the performance, Andrew Rallo relied on the age-old practice of cold calling. "To me, it just made sense," he says, "Subway music and Madison Square Garden are the perfect match. I just didn't stop calling until I made it happen."

FUNDING RECORDINGS. Believed to be the only search engine for subway musicians, Subway Records delivers its service in tiers. First, it gives musicians Web-based exposure by listing and marketing their music online. Most times, artists have already produced their own albums, and Subway Records sells them on their behalf. However, unlike traditional record labels, the Subway Records musician pays nothing for this service. For its cut, the company charges the consumer an extra couple of dollars on top of the musician's asking price.

Rallo also acts as agent, booking his artists' paying performances at gallery openings and other events for a negotiated fee, generating additional revenue. He's constantly networking to find opportunities for his musicians to perform, and many times event hosts find him via his all-important Web site.

The second tier comes after judging an artist's marketability. If Rallo notices that a musician is working hard to sell CDs online or they're driving a lot of traffic to the site, then he will spend more time and energy on the artist. He'll even fund production of an album for musicians he feels have the potential to sell enough CDs online to be profitable, and the artists take it from there. After all, they're constantly performing -- simultaneously promoting themselves and Subway Records.

OVERCOMING STIGMA. Down the line, a select few will be raised to the highest tier -- into the hands of upper-level record executives, who may mold them into bigger sellers. Through his networking skills, Rallo has already seen larger outfits express interest in forming marketing and production partnerships with Subway Records.

Don Gorder, head of the music business/management department at Boston's Berklee School of Music, says Subway Records' model -- using technology to promote a particular niche -- represents "the wave of the future" in the industry. But he warns that the approach remains very much the exception rather than the rule. "We have yet to see a really hot, successful label marketed entirely over the Internet," he says. "But I think it can be done."

Rallo says Subway Records is in the black, and he confesses that much of its growth has come from simply filling a void. "No one else wants to do what we do," he says. "No one has been willing to work with these musicians because of the deep-rooted stigma they carry with them of being bums or beggars."

BEYOND THE BIG APPLE. But Steve Ciabattoni, editor of CMJ, one of the most prominent magazines supporting independent music, says Subway Records shares qualities with some of the most successful indie labels: "They appeal to a loyal fan base because the artists all come from one community and are chosen because the people supporting them really love their music." Ciabattoni, who admits to missing trains after becoming so engrossed by musicians on the platform, adds, "I believe Subway Records will succeed if they keep that spirit." He had been keeping tabs on one of his favorite subway acts, a tribal percussion band called Mecca Bodega, when he learned of its integration into Rallo's growing network.

By the end of 2004, Subway will represent over 200 musicians. And the site's traffic keeps increasing: With no outside marketing, it garners 2,000 to 20,000 hits per week depending on the level of recent media coverage, and fans have purchased almost 200,000 CDs online to date. Rallo is also looking beyond the Big Apple, with plans to sign musicians from Boston, San Francisco, Toronto, and Tokyo over the next few years.

Still, the process remains rooted in simplicity. All subway musicians are subject to the same test: If people interrupt their commute long enough not only to listen but to fork over their hard-earned money, then Rallo knows he has found a winner. Gangemi is a contributing correspondent for BusinessWeek Online


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